THE ROLE OF INTERNAL AUDIT IN ENHANCING GOOD CORPORATE GOVERNANCE
Keywords:
Internal Audit, Good Corporate Governance, Fraud PreventionAbstract
This study aims to review previous research findings on the role of internal auditing in improving good corporate governance and preventing fraud through the implementation of risk management. The method used in this study is library research, which refers to various research findings and relevant literature. Internal auditors serve as independent supervisors who assess the effectiveness of internal controls and identify potential risks of fraud. Internal auditors are supervisors who examine all operational activities within an organization. Therefore, auditors must have a high level of theoretical knowledge and practical experience in order to recognize the signs of possible fraud schemes, thereby enabling the prevention of fraud within the organization. The results of the study show that the better the implementation of internal audit functions, the more effective the application of Good Corporate Governance in a company, thereby increasing the trust and integrity of the organization.
References
Abdullatif, M., & Kawuq, S. 2015. The role of internal auditing in risk management: evidence from banks in Jordan. Journal of Economic and Administrative Sciences, 31(1), 30–50. https://doi.org/10.1108/jeas-08-2013-0025
Abidin, N. H. Z. 2016. Asian review of accounting article information : factors influencing the implementation of riskbased auditing. Asian Review of Accounting, 25(3), 361–375.
Al-Shetwi. (2011). Impact of internal audit function (IAF) on financial reporting quality (FRQ): Evidence from Saudi Arabia. African Journal of Business Management, 5(27), 11189–11198. doi: 10.5897/ajbm11.1805
Anugerah, Rita. (2012). “Good Corporate Governance”: Peranan Komite Audit Dalam Mewujudkan Kredibilitas dan Objektivitas Laporan Keuangan Perusahaan. Minda Emas Dosen Perempuan (Sempena 50 Tahun Universitas Riau) hal 225-234.
Anugerah, R. (2014). Peranan Good Corporate Governance Dalam Pencegahan Fraud. Jurnal Akuntansi, 3(1), 101–113.
Asghar, M. J. e K. A., Anwar, Z., Usman, M., & Khan, H. (2021). Better Corporate Governance Leads to Better Performance: Evidence from Asian Countries. Argumenta Oeconomica, 1(46).
Bananuka, J., Korutaro, N. S., Irene, N., & KaawaaseTwaha. 2018. Internal Audit Function, Audit Committees’ Effectiveness and Accountability in the Ugandan Statutory Corporations Abstract. Journal of Financial Reporting and Accounting, 33(1), 90–114.
Benson, M. L., Madesnsen, T. D., & Eck, J. E. (2009). The criminology of white-collar crime. The Criminology of White-Collar Crime, 2006, 1–228. https://doi.org/10.1007/978-0-387- 09502-8
Buallay, A., Hamdan, A., & Zureigat, Q. (2017). Corporate governance and firm performance: evidence from Saudi Arabia. Australasian Accounting, Business and Finance Journal, 11(1), 78-98.
Bramasto, A. (2022). Pencegahan Kecurangan Dengan Audit Internal. Jurnal Akuntansi, 11, 64–82.
Carcello, J. V., Hermanson, D. R., & Raghunandan, K. (2005). Factors associated with U.S. public companies’ investment in internal auditing. Accounting Horizons, 19(2), 69–84. https://doi.org/10.2308/acch.2005.19.2.69
Chen, S., & Komal, B. (2018). Audit committee financial expertise and earnings quality: A meta-analysis. Journal of Business Research, 84, 253-270.
Christopher, J., Sarens, G., & Leung, P. (2009). A critical analysis of the independence of the internal audit function: Evidence from Australia. Accounting, Auditing and Accountability Journal, 22(2), 200–220. https://doi.org/10.1108/09513570910933942
Cohen, J., Krishnamoorthy, G., & Wright, A. (2004). THE CORPORATE GOVERNANCE MOSAIC AND REPORTING QUALITY. Journal of Accounting Literature, January 2008, 87–152.
Cohen, J., Krishnamoorthy, G., & Wright, A. M. (2002). Corporate Governance and the Audit Process. Contemporary Accounting Research, 19(4), 573–594. https://doi.org/10.1506/983M-EPXG-4Y0R-J9YK
Cressey, D. R. (1950). The Criminal Violation of Financial Trust. American Sociological Review, 15(6), 738–743.
Dzikrullah, A. D., Harymawan, I., & Ratri, M. C. (2020). Internal audit functions and audit outcomes: Evidence from Indonesia. Cogent Business and Management, 7(1). https://doi.org/10.1080/23311975.2020.1750331
Goodwin-Stewart, J., & Kent, P. (2006). The use of internal audit by Australian companies. Managerial Auditing Journal, 21(1), 81–101.
Gramling, A. A., Maletta, M. J., Schneider, A., & Church, B. K. (2004). The role of the internal audit function in corporate governance: A synthesis of the extant internal auditing literature and directions for future research. Journal of Accounting Literature, 23, 194.
Jaswadi, J., Purnomo, H., & Sumiadji, S. (2022). Financial statement fraud in Indonesia: a longitudinal study of financial misstatement in the pre-and post-establishment of financial services authority. Journal of Financial Reporting and Accounting.
Jensen, M., C., and Meckling, W., H., (1976). Theory Of The Firm: Managerial Behavior, Agency Costs And Ownership Structure. Journal of Financial Economics. doi: https://doi.org/10.1016/0304-405X(76)90026-X
Joksimovic, M., & Alseddig, A. (2017). The internal audit as function to the corporate governance. Megatrend Revija, 14(2), 109–125. https://doi.org/10.5937/megrev1702109j
Koutoupis, A., Pazarskis, M., & Drogalas, G. (2018). Auditing Corporate Governance Statements in Greece–the role of internal auditors. Corporate Governance: The international journal of business in society.
Lenz, R., & Sarens, G. (2012). Reflections on the internal auditing profession: What might have gone wrong? Managerial Auditing Journal, 27(6), 532–549. https://doi.org/10.1108/02686901211236382
Mikes, A. 2009. Risk management and calculative cultures. Management Accounting Research, 20(1), 18–40. https://doi.org/10.1016/j.mar.2008.10.005
Narcisa, L. (Cioban) A., & Elena, H. (2017). The Role and Implications of Internal Audit in Corporate Governance. Eurasian Studies in Business and Economics, 4(C), 89–101. https://doi.org/10.1007/978-3-319-39919-5_8
Paape, L., Scheffe, J., & Snoep, P. (2003). The Relationship Between the IA and Corporate Governance. 262(July), 247–262.
Petraşcu, D., & Tieanu, A. (2014). The Role of Internal Audit in Fraud Prevention and Detection. Procedia Economics and Finance, 16(May), 489–497. https://doi.org/10.1016/s2212-5671(14)00829-6
Roussy, M., & Rodrigue, M. 2018. Internal Audit: Is the ‘Third Line of Defense’ Effective as a Form of Governance? An Exploratory Study of the Impression Management Techniques Chief Audit Executives Use in Their Annual Accountability to the Audit Committee. Journal of Business Ethics, 151(3), 853–869. https://doi.org/10.1007/s10551-016-3263-y
Sarens, G., Abdolmohammadi, M. J., & Lenz, R. (2012). Factors associated with the internal audit function’s role in corporate governance. Journal of Applied Accounting Research, 13(2), 191–204.
Saptapradipta, P. (2019). Pengaruh Audit Internal dan Pengendalian Internal Terhadap Pelaksanaan Good Governance (Studi pada Badan Layanan Umum Universitas Brawijaya Malang). 17.
Sawarjuwono, T., & Kadir, A. P. (2003). Intellectual capital: Perlakuan, pengukuran dan pelaporan (sebuah library research). Jurnal Akuntansi Dan Keuangan, 5(1), 35–57.
Schuchter, A., & Levi, M. (2016). The Fraud Triangle revisited. Security Journal, 29(2), 107– 121. https://doi.org/10.1057/sj.2013.1
Stewart, J., & Subramaniam, N. 2010. Internal audit independence and objectivity: Emerging research opportunities. Managerial Auditing Journal, 25(4), 328–360. https://doi.org/10.1108/02686901011034162
Tamimi, O. Y. 2021. The role of internal audit in risk management from the perspective of risk managers in the banking sector. Australasian Accounting, Business and Finance Journal, 15(2), 114–129. https://doi.org/10.14453/aabfj.v15i2.8
Vadasi, C., Bekiaris, M., & Andrikopoulos, A. (2020). Corporate governance and internal audit: an institutional theory perspective. Corporate Governance (Bingley), 20(1), 175–190.
Wardoyo, T. S., & Lena. (2010). Peranan Auditor Intenal Dalam Menunjang Pelaksanaan Good Corporate Governance (Studi Kasus Pada PT Dirgantara Indonesia). Akurat Jurnal Ilmiah Akuntansi, 3.
Wu, X. (2005), Firm accounting practices, accounting reform and corruption in Asia, Policy and Society, Vol. 24 No. 3, pp. 53-78.
Zeng, H., Yang, L., & Shi, J. (2021). Does the supervisory ability of internal audit executives affect the occurrence of corporate fraud? Evidence from small and medium-sized listed enterprises in China. International Journal of Accounting and Information Management, 29(1), 1–26. https://doi.org/10.1108/IJAIM-02-2020-0020
Downloads
Published
Issue
Section
License
Copyright (c) 2025 Lila Alwyah (Author)
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
